Banks ease debt collection norms to support cash-strapped firms
Even government companies like BSNL as well as private sector suppliers to government departments are facing cash-flow strains due to delayed payments. Corporation Bank GM BK Divakara said the bank has been relaxing collection dates only on a case-to-case basis. “We are not relaxing norms across the board. If the problem is genuine and the quality of the debtors is good, we are supporting companies because their liquidity is under stress,” he said.
Divakara said the sectors that are seeing most strain in cash flows are construction contractors, manufacturing companies, independent power producers and suppliers to government companies. SL Bansal, CMD, Oriental Bank of Commerce, said many companies seeking an extension in the debt collection cycle are small and medium enterprises. “The clients to whom many of the mid-segment companies supply goods to are under stress. This is leading to irregularities in receiving payments,” he said. Bankers say small and mid-sized companies also account for the largest number of defaults and NPAs in the system.
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